IMF bailout must be renegotiated - Prof Kusi
Government has been advised to renegotiate the terms of the International Monetary Fund’s (IMF) bailout programme to meet the realities on the ground.
The Executive Director of the Institute of Fiscal Studies, Professor Kwadwo Kusi was of the view that sticking to the programme in its current form will be problematic unless the macro-economic fundamentals are improved tremendously.
He argued that the IMF bailout programme for Ghana “needs to be reviewed or re-adjusted.”
Government in February this year, secured US$940 million deal from the IMF to help the country turn around the ailing economy by helping to stabilise the cedi and reduce the fiscal deficit.
The three main pillars of the bailout are to; restrain and prioritize public sector spending, increase tax collection and strengthen the effectiveness of the Bank of Ghana’s monetary policy role.
Speaking at the Economy Ghana Network’s forum at ISSER on Ghana’s fiscal challenges and the IMF bailout, Prof. Kusi questioned the country’s ability to attain the GDP and deficit targets set by the IMF.
He argued that the growth in the non-oil sector will not be able to reach the desired level hence, making it too optimistic for the 6.5 percent target in 2016, adding that, the economy can only be revived if the current power crisis is resolved quickly.
Prof Kusi insisted that a sharp reduction in the deficit is a dream which is impossible, considering the IMF only disbursed 12.5 percent to the bailout funds.
He maintained that it was contradictory for the IMF to insist Ghana undergoes strong front loading fiscal management policies and expect the economy to grow.
He also stressed that it is unrealistic for one to expect that donor funds will flow just because of the IMF programme because according to him, “donor partners think there is too much corruption and fiscal irresponsibility and until that is changed, very little donor funds will come in.”
Some economic analysts have indicated that the money is not enough to fix the struggling economy but the President, John Mahama is of the view that Ghana’s economic transformation is largely dependent on Ghanaians and not international partners such as the IMF.
On June 19, the IMF began its first review on Ghana following its approval of the extended credit facility for the country early this year.
The review is expected to end on Tuesday, June 30, 2015.